This course is intended to be a guide for small businesses to help determine if exporting, as a business strategy, makes sense and whether the basic ingredients for export readiness are in-place.
Duration of the course: 00:30:00
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Slide 6: Expanding World Markets
Did you know that over 95 percent of the world’s population lives outside of the United States. That means, if you have a product or service to sell, you may want to go where the buyers are and, increasingly, that’s outside of the United States. Going global is real!
New technologies, advanced communications and improved travel and delivery options are making the world – as we know it – smaller. Today, via the Internet, we can communicate across the globe in an instant. We have access to information and markets all over the world, making it relatively easy to identify new opportunities and increase sales in foreign markets.
It is critical for small U.S. businesses to think globally. You may have already discovered that your company is competing internationally because foreign-owned companies are competing with you in
your “domestic” markets. The line between domestic and international markets is becoming increasingly blurred.
In a world of over 6 billion people, global communication networks, next-day---world-wide deliveries and international television, it no longer makes sense to limit your company’s sales to local or even national markets. Your business cannot ignore international influences and opportunities, if you intend to maintain your market share and keep pace with your competitors.
Exporting is crucial to America’s economic health. Increased exports mean business growth, and business growth means bigger profits for U.S. companies—all of which ultimately result in more jobs for American workers.
Slide 7: Is Exporting for You?
There are many advantages to exporting. However, international trade is not for everyone. You may be interested, but your business may not be suited or ready for exporting.
There are several ways to evaluate the export potential of your products and services in foreign markets. The most common approach is to examine the success of your products domestically. If your company is successful selling in the U.S. market, then there is a good chance that it will also be successful in international markets.
Slide 8: Export Readiness
To help gauge your export readiness, think about and respond honestly to the following questions: Is exporting consistent with the vision and mission of your company?
Does your company have products and services that are successfully sold in domestic markets?
Why will your products be successful in international markets?
Do you have the commitment, persistence and financial resources to actively support the marketing of your products in targeted international markets?
Discussing and answering these questions with a mentor or international trade advisor will help define your readiness for exporting.
Slide 9: Readiness Assessment Tool
At your convenience, come back to this page and use this automated assessment tool to determine your readiness for exporting.
This nine question tool was developed by the Foreign Agriculture Service. It’s well done.
After answering the questions you will receive a score that will help you evaluate your export readiness, as well as identify areas your business needs to improve its export capacity.
Slide 10: Preparing for Global Markets
OK, let’s get started…..
Success in business often depends on how well you prepare yourself and your business --- but, you know that already. If you are already in business, you know things just don’t fall into place, without proper research and planning.
It is no different in the world of exporting….To successfully penetrate international markets, you need to understand them. There are many ways you can research global markets. Several proven methods include:
Keep abreast of world events that influence the international marketplace, watch for announcements of specific projects, or talk with foreign buyers at U.S. trade shows.
Go to industry roundtables, lunches or briefings. Talk to suppliers, bankers, colleagues and trade professionals like shippers, or other successful exporters.
Your existing network is probably a good starting point. But get advice from trade experts and experienced exporters. Contact the trade specialists at the U. S. Department of Commerce, your state’s economic development department, local or regional trade associations, or you could hire an international trade consultant.
Slide 11: Screen Potential Markets
Market research is key. Once you have completed your basic due diligence – further analyze or screen potential markets. Consider following these steps.
Step 1. Obtain export statistics that describe the volume of product exports to various countries. Published export statistics provide a reliable indicator of where U.S. exports are currently being shipped. The U.S. Census Bureau provides these statistics in a published format. Check with a trade expert or mentor to help find this information.
Step 2. Identify five to ten large and fast-growing markets for your company’s product. Review them over the past three to five years to determine if market growth has been consistent. Be cautious of markets where growth is inconsistent.
Step 3. Identify some smaller but fast-emerging markets that may provide ground-floor opportunities. If the market is just beginning to open up, there may be fewer competitors than in established markets. And,
Step 4. Target identified and promising markets and consult with trade mentors and experts to help further evaluate such markets.
Keep in mind, that there is a wealth of online country and market information available to help you screen potential markets. Powerful resources such as export.gov, the Commerce Department and others can be very helpful and are highlighted later in this program.
Slide 12: Develop an Export Strategy
OK -- so you’ve done your research and are now ready to develop an export strategy. You have two basic choices, selling directly or indirectly to foreign markets.
Indirect selling is a common approach, especially for small businesses just entering international markets.
Using the indirect approach, a business can engage an intermediary such as an export management company or export trading company to sell products in foreign markets. Indirect selling is a popular choice for American firms, especially small businesses.
Direct selling to international customers is the most ambitious yet the most difficult approach because you are working directly with foreign entities.
Slide 13: Indirect Selling
Indirect selling, through intermediaries, is the easiest way to enter international markets. Export
Management Companies and Export Trading Companies are, such intermediaries.
Export Management Companies act as your “off-site” export department, representing your product— along with the products of other companies—to prospective overseas buyers. The export management company looks for business on behalf of your company and takes care of all aspects of the export transaction. Hiring an EMC is often a viable option for smaller companies that lack the time and expertise to break into international markets on their own. Some specific functions EMCs perform include:
• Conducting market research to determine the best foreign markets for your products;
• Attending trade shows and promoting your products overseas;
• Assessing proper distribution channels;
• Locating international representatives and/or distributors; and,
• Arranging export financing, and, handling export logistics, and advising on the legal aspects of exporting and other compliance matters.
Export Trading Companies do many of the same functions, but also take title to the product.
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